Should you consider investing in real estate properties or stock? You possibly have asked yourself this question whenever you consider investing your hard earned money.
It is true that investing require some pool of assets to consider from. Common considerations that one look before investing includes the capital involved, time it consume and returns from that investments.
In this article, we are going to explore on the reasons that make real estate better investment compared to stock market.
Real estate investment is arguably the best kind of investment based on rate of returns and in terms of regular cash inflow. Unlike stock real estate properties creates liquidity that can be used for other investments.
Unlike stocks real estate once built, you don’t have to be monitoring every other time unlike stock investment where you need to keep balancing the portfolio to give desirable return of investment every year.
In addition, stocks are very volatile and sometimes it can be affected the most during financial crash. Stock investors makes their money through capital appreciation or dividends. If one chooses capital gains, they won’t get dividends. So one has to make it clear of what they are looking for before deciding to invest in stock.
For people that are looking to build a retirement plan then real estate offers the best options to generate monthly income during their unproductive age in life.
When investing in real estate, you are buying physical property that you can see and touch. It is an investment that you can generate income through rental income. Unless when the property isn’t occupied with tenants, which often isn’t the case since populations keep increasing as economy increases as well.
The return of real estate is high and risk is low as compared to stock which often have an increase risk due to the level of volatilities in the market.
One of the greatest benefit of owning real estate properties is that it has tax breaks from the government. For instance, all property expense, mortgage interests are tax deductible every year. Another advantage is capital gains on properties flipped after one year.
On the other hand, stock only have favorable tax rates on dividends gain from owning stocks. Government bonds are tax free.
Real estate appreciation
Real estate properties is only class that is guaranteed to appreciate in value. This back by the fact that the land which the property is built only appreciate in value with time.
The invest and hold model of investing is best suited for people who buy vacant plots on strategic location and hold for some time.
“Properties in Ngong town, 5 years ago were being sold at $1500, 4 years down the line, and the same piece of landsells at $6000. This is incredible capital gain for real estate investors who bought land and wait for infrastructure to developed,” says the CEO, Username Investment limited
Contrary to real estate, stocks isn’t guarantee to appreciate. It fluctuates as its prices is dependent on other variables like political climate, economic performance in a country among other factors.
In conclusion, based on the above reasons we can say real estate is better than stock. Above those reasons, real estate investors have better control over their investment than in stock market.